What The CEO Wants You to Know by Ram Charan (Author)

Book: What the CEO Wants You to Know

What the CEO Wants You to Know by Ram Charan is one of the financial leadershipbooks that we encourage all of our coaching participants to read. In this book, you will learn…

• How your company really works
• Developing business acumen
• Tackling complexity
• Viewing business like an investor would
• How to execute successfully

Why this book is on our list?

From notable CEOs to street vendors – they all share a common secret to success by developing business acumen and learning to apply these fundamentals to all types and sizes of business. What the CEO Wants You to Know How Your Company Really Worksrecognizes that every business is the same inside. More specifically, all CEOs focus on cash generation, return on assets, growth, and customers. Learning how to block and tackle with these tools and stay out of the weeds comes with experience. Good CEOs cut through the complexities and bring clarity and simplicity. They look at businesses like investors would – investigating inconsistent PE multiples by revisiting the fundamentals. And most importantly, CEOs know how to execute.

Therefore, if you want to truly understand what the CEO wants you to know, the first key to getting things done is putting the right people in the right jobs, not shying away from conflict, and knowing when to make step changes along the way. Coaching is also a key success factor to execution – both from a business and behavior perspective. Synchronization and integration of efforts along with building effective social operating systems are also keys to successful execution.

 

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Understand These Concepts

To learn how your company really works, you must understand the concepts of cash generation, return on asset, growth, and customers.

1. Cash Generation

Cash generation is the difference between all inflows and outflows of cash into the business in a given time period. In larger organizations this concept become more complex with the introduction of credit but in the end the complexities can be distilled back to this simple concept.

2. Return on Assets

Return on Assets (“ROA”), which is similar in concept to Return on Investments (“ROI”) and Return on Equity (“ROE”), “…tells you how much money is coming into your business from the use of your assets, from the investments the business has made, or from the investment shareholders have made in the company (equity).” The return is a function of margin and velocity – that is “the faster the velocity, the higher the return.”

3. Growth

What a CEO wants you to know is that growth is vital to prosperity. It should be profitable and sustainable. Many often measure growth by a concept called ShareholderValue Added (“SVA”). Effectively SVA measures whether the business through its management team is earning “…a return that is greater than the cost of using other people’s money.” However, to gain a true perspective of the quality of growth, you will need to drill down into the details of cash generation and return on assets. Focusing on business acumen is also how successful CEOs find opportunity for profitable growthwhen others cannot.

4. Customers

The last concept focuses on knowing your customers. What the CEO wants you to know is that knowing your customers means knowing their preferences and what they are dissatisfied with. Direct contact with the customer often provides greater insight then solely relying on focus groups and other market research.

Author: Ram Charan

Ram Charan also spends time focusing on the people side of the equation. This includes putting the right people in the right jobs and dealing with mismatches. With regards to coaching, “…a true leader of people expands their capacity by helping them channel their skills, develop their abilities, and release their positive energy.” The focus should be both on the business side and personal behaviors. What the CEO Wants You to Know also dives into the subject of how to make groups more decisive by designing social operating mechanisms to synchronize efforts and link them to business priorities.

For example, “in a small organization, everyone knows everything that is going on….but as an organization grows and you have dozens, if not hundreds, of people working together, synchronization becomes a greater challenge.” Structures are created to encourage social interaction increasing complexity. The challenge in larger organizations is simplifying communications and unify efforts and priorities. 

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What the CEO Wants You to Know takes the mystery out of business and shows you the secrets of success



Have you ever noticed that the business savvy of the world's best CEOs seems like a kind of street smarts? They sense where the opportunities are and how to take advantage of them. And their companies make money consistently, year after year.

How different is it to run a big company than to sell fruit from a cart or run a small shop in a village? In essence, not very, according to Ram Charan. From his childhood in India, where he worked in his family's shoe shop, to his education at Harvard Business School and his daily work advising many of the world's best CEOs, Ram understands business as few can.

The best CEOs have a knack for bringing the most complex business down to the fundamentals--the same fundamentals that are used to run the family shoe shop. And, they have business acumen--the ability to focus on the basics and make money for the company. 

What the CEO Wants You to Know captures these insights and explains in clear, simple language how to do what great CEOs do instinctively and persistently: 

* Understand the basic building blocks of a business and use them to figure out how your company makes money and operates as a total business.

* Decide what to do, despite the clutter of day-to-day business and the complexity of the real world. 

Many people spend more than a hundred thousand dollars on an MBA without learning to pull these pieces of the puzzle together. Many others lack a formal business education and feel shut out from the executive suite. 

What the CEO Wants You to Know provides you with the universal laws of business success, no matter whether you are selling fruit from a stand or running a Fortune 500 company.